The Definition Of Financial Planning
Financial planning is a systematic approach whereby the financial planner helps the customer to maximize his existing financial resources by utilizing financial tools to achieve his financial goals.
Financial planning is simple mathematics. There are 3 major components :
When you want to maximize your existing financial resources by using various financial tools to achieve your financial goals, that is financial planning.
- Financial Resources (FR)
- Financial Tools (FT)
- Financial Goals (FG)
Financial Planning : FR + FT = FG
In other words, financial planning is the process of meeting your life goals through proper management of your finances. Life goals can include buying a home, saving for your children's education or planning for retirement. It is a process that consists of specific steps that help you to take a big-picture look at where you are financially. Using these steps you can work out where you are now, what you may need in the future and what you must do to reach your goals.
What Does A Financial Planner Do?
A financial planner, is someone who uses the financial planning process to help you figure out how to meet your life goals. The planner can take a `big picture` view of your financial situation and make financial planning recommendations that are right for you. The planner can look at all of your needs including budgeting and saving, taxes, investments, insurance and retirement planning.
Or, the planner may work with you on a single financial issue but within the context of your overall situation. This big picture approach to your financial goals sets a financial planner apart from other financial advisers who may have been trained to focus only on a particular area of your financial life.
The financial planner is the best friend you need to advice you on ways of achieving financial goals. He is a client-oriented professional who works in the best interest of customers.
When you have a professional relation ship with a planner, that does not mean that he replaces other professionals such as lawyers or accountants. A planner is a coordinator who works with others in making the planning process work.